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Common Mistakes Claiming Charitable Donations on Taxes

charity jar

Giving to charity does good, feels good and could earn you a tax break — just be sure you read up on the new tax law. Many people who itemized deductions prior to the 2018 tax year will find it makes more sense to take the standard deduction. This means no more claiming charitable giving as itemized deductions, unless you plan to alternate years by “bunching” your donations.

If you aim to claim a deduction for donating, be sure you’re also giving some attention to properly preparing your return. CPA and former government-appointed tax auditor Jules Hunter narrowed down three common charitable donation mistakes that could save you time, money and possibly an IRS penalty when claiming tax-deductible donations.

Not Claiming Out-of-Pocket Expenses Incurred While Volunteering

Many taxpayers mistakenly try to claim time they donated to a charitable donation (which is not tax deductible), however they often overlook out-of-pocket expenses, such as mileage accrued on their vehicles while volunteering, which are tax deductible.

Miscalculating a Deduction

Another common charitable donation mistake happens when taxpayers receive a benefit such as event tickets in exchange for their donation. They often (and mistakenly) try to claim the full amount of their cash contribution without subtracting the fair market value (FMV) of the tickets. You may claim the full deduction only if you refuse the tickets.

Not Keeping Proper Records

“Substantiation is something the IRS focuses on,” Hunter adds. Make sure receipts for donated goods include estimated value. If you make a contribution of $250 or more in a day, be sure to get written acknowledgement from the organization.

Should You Correct Your Return?

If you make one of these common charitable donation mistakes, you have three years from the filing date to amend your return.

“Filing amended returns does not increase your chance of the original return being selected for audit,” Hunter says. “However, there is a new return subject to scrutiny.”

Although it is best to get your return right the first time, Hunter says taxpayers should not be shy about correcting their taxes.

“If you deserve an additional refund, you should claim it,” Hunter says.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]